The idea that economic growth is a problem is seriously outdated, according to University of Ghent philosopher Maarten Boudry (photo), He called divestment “nonsense” and advised investors to be wary of “green” funds. “There is a lot of irrationality in these so-called ethical investment choices”, he said.
In November 2021, Boudry published his book Why our climate is not going to ruin: (if we keep our cool). Investors who want to cut investments in non-sustainable energy sources out of portfolios in order to save: the climate would also do well to keep a cool head, said Boudry.
“Divestment does not work at all. As long as there is demand for oil, for example, a cheap, massively used and totally indispensable product, that industry will continue to run. Only stopping to buy petrol will have an effect. A divestment strategy by an institutional party is absolutely no risk to parties like Shell or ExxonMobil.”
What is wrong with divestment?
“The oil and gas market is extremely efficient and the elasticity is high,” said Boudry. “All divestments will immediately be filled by less scrupulous investors. It is clear that something has to change, but as long as we don’t do it in unison and globally, we have to come up with better solutions. It is as simple as that.”
“Beware of so-called ethical or green investment funds. Green investment funds that are in biomass, for example, cause a huge amount of deforestation. There is a lot of irrationality in so-called ethical investment choices. Green funds are often opportunistic and dance to the tune of public opinion.”
“It is easier for investors to make a difference by investing positively in companies with little capital and a good idea. Then the good ideas really get off the ground.”
In your book, you state that economic growth is the solution. How do you see that?
“The real game-changer is new technology. In order to develop that technology, we need growth. People who advocate consumerism ironically do not understand the scale of the problem. The goal is not to consume less, the goal is to reduce CO2 emissions to zero. A society whose economy stops growing will never achieve that goal. Growth is therefore not the problem, but the solution. If you slow down growth by consuming, for example, you shoot yourself in the foot as an economy. You also lose support. People are much harder to convince when the cake is not growing anymore.”
What should be done in concrete terms with coal, gas and oil?
“With today’s resources, emerging countries have no choice but to burn coal and gas. We simply cannot ban the fossil industry on a global scale. If rich countries leave their gas reserves underground, the rest of the world will not simply follow suit. We have no leverage to convince countries to leave their reserves untouched.”
“It is also immoral to limit the choices of poor countries, while we have been burning coal on this continent for two centuries. Look at Germany, who - as a forerunner of the transition - will continue to burn coal until 2038.”
“Germany thus loses its moral right to tell the rest of the world what to do. Even Norway, where half the people drive electric vehicles, still earns 20 percent of its GDP from selling gas and oil. Poor countries need to be persuaded to leave coal in the ground by offering a sustainable, affordable and scalable alternative.”
Given the urgency, can we wait for this new technology?
“People who cannot wait for new technologies must hope for massive behavioural changes. That hope is still a lot thinner. Flying and driving less will take much longer. Until now, environmental pollution has not been solved by consuming less or having fewer children, but by decoupling consumption from environmental impact, thanks to smart technological innovations. We did not drive less, but took lead out of our petrol. We continued to burn oil and coal, but installed filters in our chimneys to stop soot and sulphur.”
“I can’t imagine a scenario in which the temperature won’t warm up in the next ten years. The Paris Agreement is guaranteed to fail, but there is also no point in “saving” the climate while keeping the Chinese and Indians poor. No country in history has ever escaped poverty without fossil fuels. You simply cannot industrialise a country with solar panels and windmills. That is really irrational.”
What solutions do you have in mind?
“If we were to build exactly the same reactors now as France did in the 1970s, we could already operate completely CO2-neutral as an economy. Let alone what the installation of modern nuclear reactors could mean. The only thing is that the cost price of them must come down.”
“Actually, we are not at all uncertain about the physical feasibility of moving away from fossil fuels. A radical new technology is needed, but it will come [nuclear fusion is one such technology]. Battery storage for solar and wind energy is already available, but it is expensive, so we will not be able to convince emerging countries of it.”
“Man is the most innovative species on the planet. We can live anywhere in the world. The risk of an existential crisis is nil as far as I am concerned. The real doomsday scenarios, where there is talk of the disappearance of mankind, are nonsense.”
Does economic growth have no end point?
“We are nowhere near unsustainable growth. Although it is an age-old argument, it was passionately reiterated in 1972 by the Club of Rome, a private foundation of European scientists who voiced their concern about the future of the world. It seems that even the intellectual heirs of the fatalistic Club of Rome have learned nothing.”
Boudry acknowledged that the idea that nothing can grow infinitely sounds logical. Yet the opposite is the case, he argued. The philosopher quotes Lewis Wolpert, the South African biologist and author of Unnatural Nature of Science, which appeared in 1998. In that book, Wolpert explains that much of science is counterintuitive; it often contradicts so-called common sense.
“If something is intuitive, there is a good chance that it is not science. The truth is often just the opposite of what you suspect. This theory can also be applied to dogmas about economic expansion. Growth in itself is not necessarily finite.”
Maarten Boudry (1984) is science philosopher and holder of the Etienne Vermeersch chair at Ghent University. His most recent books are “Why our climate isn’t going to hell” (2021), “Why the world isn’t going to hell” (2019) , “First Aid for Pandemics” and “From Backlash to Black Swan” (2021), with Joël De Ceulaer.